.png)
The Indian government has announced its plans to move from a minimum wage system to a living wage system by 2025. This shift has the potential to improve the lives of employees and their families across the country.
India's current minimum wage system has long been criticized for not doing enough to reflect the true cost of living, even though it sets a legal floor for compensation. A basic standard of living for employees and their dependents are frequently not ensured by minimum wages. This has caused millions of Indians to remain trapped in a cycle of poverty and unstable employment.
Living wage vs Minimum wage
The International Labor Organization (ILO) defines the living wage as the wage level necessary to afford a decent standard of living for the workers and their families. On the other hand, the Minimum wage is the least amount of money that employers are legally obligated to pay their workers.
However, the government's decision to adopt a living wage approach represents a significant shift in priorities. A living wage is calculated by using the actual expenses. It is required to maintain a simple standard of living in a specific location. This includes not only the basic necessities of water, food and shelter, but also the essential costs like healthcare, education, and transportation.
Government Initiative
India aims to provide wages to workers that truly reflect the modern life’s style. This move is not only a government commitment to social welfare but also a strategic investment in the country’s long-term economic prosperity. The government is also looking for technical assistance from the International Labour Organization (ILO) to create a strong framework for estimating and implementing the living wage.
On March 13, 2024, ILO had a meeting with wage policy experts, where ILO endorsed the living wage concept to demonstrate the growing international consensus on this approach.
As more countries around the world engage with the issue of income inequality and worker welfare. Where India is planning to shift to a living wage. This could be an inspiration for those who are struggling to create more equitable and inclusive economies.
Thank you.
Regards,
Kamal Kumar,
Kautilya, IBS Mumbai.
Comments